I'm almost sure those remittance companies all speculate on FOREX to maximize their gain, so they can afford cutting their fee if there is some competition. And most of the competition for them today is coming from online payment. I often see people buying/selling bitcoin using mobile payment at localbitcoins to do international remittance, that still costs less than WU if he knows how to put a limit order on localbitcoins

Because they do it the wrong way. I constantly use bitcoin to send money oversea and every time I can make a little bit money during the process. They must use limit order on exchanges and do not buy high and sell low

Bitcoin is for users with IT and financial experience, average Joe better rely on centralized services

In the end, it is still miners decide, since they hold hash power, and most of the miners also hold lots of bitcoins, both are essential to kill a competing chain. A competing chain will not survive if the security of the network and the value of the coin are both at risk

I think Fact 1# is quite accurate, trying to compare bitcoin with papal or VISA is similar to comparing car traffic vs train traffic. Even some devs are openly use this comparison, showing that their poor knowledge when it comes to finance

People should be aware that unlike bitcoin, any transaction between financial institutions (Banks, exchanges, payment processors) do not move money at all, it barely change numbers in a centralized database that stored in those institution's server, so that the net debt between those institutions changes as a result. This makes it possible to do thousands or even millions of transactions per second, because all the change is towards one database on one server, and the memory bandwidth of this server can be over 100 Gigabytes per second

To put the same traffic on bitcoin network, you have to make sure the internet connection of each user is 100GB per second, e.g. 1T bps, several magnitudes larger than the fastest home internet speed, not even mention cross continental traffic bandwidth, which typically is 100KB per second today

Another difference is the storage. Bitcoin has to store everyone's balance on blockchain. Financial institutions only store their customers balance data, they don't store data of customers of another institution, or even another branch in the same institution. This makes the size of their database highly manageable

https://medium.com/@BitFuryGroup/keep-calm-and-bitcoin-on-4f29d581276#.dz7yrygg0

FACT 1: Bitcoin Is Not an Electronic Payments System Like PayPal

FACT 2: Bitcoin Is Not and Should Not Be Free to Use

FACT 3: Bitcoin Transaction Processing Is Not Presently Clogged

FACT 4: Miners Embrace Bitcoin’s Popularity

FACT 5: Bitcoin Mining Is Decentralized

FACT 6: Mass Rule is Not Appropriate for Bitcoin

FACT 7: Bitcoin XT Would Not Have Solved Bitcoin’s Challenges

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I think FACT 6 is worth debating, because if mass rule is not working, less rule is even less likely to be working. Maybe Valery is threatening to overtake bitcoin by building a miner's consortium 

Good point, if the fee is always 0 then it is fair for everyone. But sounds like perpetual motion machine

Today, it costs the same to transact 1000 bitcoin or 0.01 bitcoin, since you have no way to tell which input is actual spending and which input is the change. So the fee is not percentage based but per transaction based

This is a feature by design. It is similar to airline ticket price must be the same for everyone, because it must allow poorest people to travel, so it must drop the ticket price to the same level as bus or subway

As a result, more and more rich people will love to use bitcoin since the fee is almost non-existing for them, and this will cause the major user group to be middle class and above. Then when the user base largely consists of these rich people, then you can not support those developing countries with extremely low income because these rich users will control majority of the infrastructure of the whole bitcoin ecosystem

Yes, suppose that I'm an average people without enough IT expertise, the only thing I can understand is that 2MB is 100% larger than 1MB, just like my 2 GB hard drive is 100% larger than my 1GB hard drive. From my point of view, if 1MB blocks already worked for 7 years fine without being full, there is almost no reason why 2MB will not work since that is a very small change, given everything else unchanged, it is very easy for me to evaluate the risk involved

However, if someone presented me a complex solution that has never been on live traffic and say this will scale bitcoin similar to 2MB increase, then there are just too much change and too much variables that I have no way to evaluate their risk

Then as you described, I can look for advice from experts and seek the guidance from "Authorities". But you know that most of the bitcoin user come to bitcoin is just because they don't trust any centralized authorities since power always corrupts. Should they trust a group of devs instead of FED? And what if these devs can not reach agreements? The reason people support 2MB is simply not because they trust Gavin or Jeff, they trust nobody, they only trust their own judgement, especially when they had millions of dollars invested

This phenomenon of simple math over complex scheme has always been witnessed at various IT products: People usually prefer a camera with larger pixel count, so the company focus on improving the image quality instead of pixel count all have failed due to lower sale of their products. Foveon sensor for example is the only sensor that can record all the color information at each pixel, but unfortunately most of the consumer only know how to count numbers

There is still this one-size-fit-all problem, e.g. it costs the same to do large transactions as well as micro transactions, since the fee is not percentage based but per transaction based

This is similar to: The airline ticket price is the same for everyone, because it must suit the poorest people who want to travel, so it must drop the ticket price to the same as bus or subway

So far the mempool has not shown any abnormal growth, comparing with the spam attack during September. I think if we have the same level of mempool size like we had in September, then many nodes will either become highly streesed or lift the relay fee

You can't have 100% full block unless the mempool is always full, and even if the mempool is always full, there would still be empty blocks due to SPV mining (Miners start to mine empty blocks immediately when they receive a new block, they don't want to waste their hash power waiting for the previous block to finish verifying, so the new block must contain only one coinbase transaction because it does not know yet which transactions in mempool should be included)

Because this is a consensus based community, anything that is more complex than 1+1=2 will not be able to reach consensus simply because not every participants have time to understand complex schemes. 2MB is most possible to reach major consensus right now

This is like asking how many roads you need to build for cars to have the same passenger traffic capacity as subway. You will have layers and layers of road in the city that you barely can see the sun  

Similar to driving license, you must have enough IT expertise and security knowledge to directly use the blockchain to do transaction, and you must have enough money to buy a car and pay for the gas (only large transactions is feasible), so there will not be so many people use blockchain directly, they will rely on experts handle this for them

Yes, with today's technology the nodes can handle 2MB blocks, so it still can grow, and a successful hard fork will prove that the concensus can be reached, both are good points

But from design perspective, it is always healthy to not push the system to its limit, you should leave enough safety margin, never use more than 1/3 of the maximum capacity

Bitcoin miners have a fatal weakness: They can not build their own internet. The whole bitcoin game must be played on internet, so the capacity of bitcoin network are ultimately limited by the internet infrastructure, and in turn that is controlled by the government. So if the day has come and world governments all openly support bitcoin, then you can scale to whatever level on blockchain because then government will specifically build high speed internet to facilitate bitcoin traffic. But it is not the case today, so better stay well within the capacity of the mainstream network speed

At current stage all the arguments are wishful thinking, so only the reality will tell. My guess is that a rising fee will not repel new users, since the cost of exchange into and out of bitcoin, together with the exchange rate risk are magnitudes higher than bitcoin's fee today, but people still come to bitcoin. So the fee is the smallest cost today that users care, it should have several magnitudes room to rise before it really become a problem

For exmple, people today typically pay 2-10% exchange fee to buy bitcoin, depends on which exchange they use, and if the market is of high volatility, they could lose 15% of the purchasing power of their coin in one day like this Friday. Such a high cost already bypass Western Union, but still more and more people purchase bitcoin, why? Because they either have some specific usage that can only be satisfied by bitcoin (drug dealing, gambling), or are aiming for 2-100x increase in value (based on its historical performance) thus this little cost is nothing comparing to the potential gain they expect from bitcoin. So even a 10% high fee does not repel users today, how could a fee which is just one dollar could prevent them from using bitcoin?

Bitcoin's fee model is based on data traffic, not the value of transaction. Transacting 100 bitcoin cost exactly the same as transacting 0.01 bitcoin, this nature due to design makes it always benefiting large transactions, and it also makes it a waste of resource to handle micro transactions, both from blockchain's and user's perspective

Your numbers are off. The miners digging out gold has nothing to do with gold's transaction cost, I've seen this strange reasoning several times. Miners come here to dig out bitcoin before it is too late, facilitating transaction is their second priority (thus SPV mining), when majority of the bitcoin has been dig, they will leave, unless the fee will rise significantly to keep their incentive


The bus can take 50 person, but a clearing based solution can take from thousands to millions of users, it is several magnitudes difference. Even if a bus can take only 50 passengers and everyone take bus, then suddenly all the traffic of this city is reduced by over 90%, there will almost be no car on the road, thus the car traffic toll will be removed

You mentioned naturists, this is a good analogy. I guess the main thinking behind the smaller block is to make it more environment friendly. As we all know, all environmental friendly solutions unavoidably cost more, but that can be regarded as an investment, the value increase caused by environmental friendly solutions are deep and long term, can lasts for generations. How can you be sure after 100 years bitcoin can still be installed on average gaming computer with decent internet connection if the size of the blockchain grows exponentially like it does today?

In order to increase on-chain capacity, bitcoin must grow like a monster, become an extremely resource intensive computer program for each nodes, while other centralized payment system will take it easily with a couple of server upgrade to reach same level of performance. In this race bitcoin has no chance to win at all. Given there are already 0 transaction fee mobile payment solutions out there, why should people pay a fee to use bitcoin to do transaction? Only centralized bitcoin payment services can provide 0 fee & instant confirmation transactions, like a bus that can sit thousands of users

You can look at China for such an example: With over 1.4 billion people in this country, it can simulate the largest traffic demand that bitcoin will ever possibly to handle. Chinese government built lots of road, and made their city looks like spider web, but still heavy congestion. The only practical travel method is subway, or intercity high speed train, each train carrying over one thousand people. So that's how a large scale system should be designed to function

In reality, road infrastructure is covered by the tax you turned into government which is around 50% of the gas price at where I live, so it is a very high cost without any ROI, but people still value that to be worthy. Everyone knows that driving a car is an expensive thing, and it often delays due to traffic jam, but they still drive a car due to the flexibility and freedom it brings. Government can set a low price for public transportation, since they have economy of scale similar to a clearing based solution

So I think a mixture of both public and private transportation is also healthy in bitcoin ecosystem: People who want low fee will seek centralized service hub and those who want to do transaction by themselves will have to pay a high fee


But increasing a toll will not impact the housing price of a city, as far as I can see

If it is so easy to add a new lane, then why are we seeing higher and higher toll and even the ban of using car under certain day? The infrastructure are difficult to upgrade, it can not follow the growth speed of car users

The road is always a cost that you must pay to use, it is just not that visible. The best way is to work at home (no physical move of the person, equal to clearing based solutions to do transaction: no real move of the bitcoin) thus the transaction cost do not impact you

Both of them have no direct relation to bitcoin price, otherwise Hearn will be able to short bitcoin and make a huge profit if his words can move the market

Thanks! I like your creative thinking very much. Let me explain my view

If you consider bitcoin to be that building, then the amount of building you can build is limited at 21 million, e.g. you can not increase the amount of building at all. (We are interested about the value of bitcoin, not the value of blockspace). So when you get more and more tenants while still have the same amount of building, the value of building will rise for sure, that's why bitcoin's value exploded

From the beginning, few people are living in the building so it costs little to move (fee). And later with more and more tenants lived in those building, the traffic increases dramatically, and the infrastructure of the city can not keep up with the exponential growth of the tenants. As a result, many people will not reach their target in one hour or more by car (use blockchain to do payment), so they would prefer to use public transportation, which is a specially built transportation rail for large amount of people to travel cheaply (clearing based solutions)

This is basically what happens in those large cities with high house price. Being able to travel cheaply is not a reason for a high house price. And typically if it costs little to travel in a city, the house price of that city is low. The more expensive the housing price is, the more expensive the local traffic become, since the tenants are richer and can afford more

From this point of view, limiting the block size at 1MB sounds like the government refuse to expand the existing road infrastructure and charge a high road tax to force majority of people to use public transportation, which is not very comfortable for the citizen. But this is really happening around the world right now: This year my city just implemented a very heavy tax on the road, and in China they even ban your car from being used during a certain day of the week. Governments are also expanding road infrastructure, but typically a road project would take almost a decade to finish and it does not increase the capacity by more than a few percent

When your transaction capacity is limited, you will plan accordingly. For example, if your bank allow you to do only one transaction per day, or 0 transaction during weekends, then you will combine all those small transactions into a large one, thus reduce the amount of transactions. In fact, behind the scene, banks combine millions of transactions daily into one single transaction to dramatically reduce the amount of transaction data